As production in spinning mills has come to a grinding halt since demonetisation, sales of yarn in western Tamil Nadu have plummeted. As a consequence, yarn stocks are piled up in city mills most of which rely on migrant labourers who have stopped work.
With shortage of labour, owners of spinning mills are unable to run their units on a daily basis. As a consequence, the number of shifts has come down to two or one per day. With inadequate workforce, mills are unable to carry out production to the capacity. This has resulted in piling up of yarn stocks. On any given time, most big spinning mills have stocks of 15 to 30 days. Now, it has piled up to three or four months.
With a fall in yarn supply, weaving units have also shrunk their output. Most weaving units have temporarily closed. They only function two or three times a week or may be for festivals or important orders. Also powerloom owners have not been able to provide full wages to their weavers and others in the industry due to demonetisation. As it is, the textile industry in Tamil Nadu has been having dull business for two years.